Higher Weight on Management Evaluation than Construction Performance
Ministry of Land Orders Service... To Apply in Evaluations Starting Next Year
The rankings of the ‘2023 Construction Capability Evaluation,’ a comprehensive report card of construction companies used for restricting bidding qualifications and selecting contractors during project orders, have been released. The Construction Capability Evaluation, which ranks companies by adding up evaluation amounts in categories such as construction performance, management status, technical capability, and credibility, has again this year assigned a higher weight to management evaluation than to construction performance, leading some to criticize that the essence of the evaluation has been diluted.
According to the construction industry on the 4th, dissatisfaction has been growing within the industry since the announcement of the 2023 Construction Capability Evaluation rankings. The reason is that even if companies work hard and accumulate construction performance, companies with larger capital receive more points and thus are ranked higher.
The ‘Construction Capability Evaluation’ is a system that comprehensively evaluates construction companies based on construction performance, management status, technical capability, and credibility so that project owners can select appropriate construction companies. This year, a total of 77,675 construction companies applied for the evaluation, accounting for 86.4% of the total 89,877 construction companies.
Looking at the weighting method for each evaluation category this year, the controversial management evaluation amount was calculated by multiplying the actual capital and management score and applying 80%. On the other hand, the construction performance evaluation amount, which is considered the most important in the construction industry, was assigned 70% based on the weighted average construction performance over the past three years.
As the industry points out, comparing the rankings of civil engineering and architecture construction companies in the Construction Capability Evaluation with the main rankings based on civil engineering and architecture (civil engineering + architecture) construction performance shows significant ranking changes depending on the criteria. Looking first at the top 10, POSCO E&C dropped three places to 7th place in the Construction Capability Evaluation amount this year, but its ranking rises to 5th based on civil engineering and architecture construction performance for apartment projects.
On the other hand, Hoban Construction, which boasts a solid financial structure, entered the top 10 for the first time this year, but when evaluated solely on civil engineering and architecture, it falls to 17th place.
Looking at the top 20, Kumho Construction was ranked 21st in the overall Construction Capability Evaluation but rose to 15th based on civil engineering and architecture performance. Daebang Construction, ranked 14th in the overall evaluation, remained at 28th based on apartment construction performance. Jungheung Togeon shows a similar pattern: 15th in the overall evaluation but 30th when considering only civil engineering and architecture. Both companies appear to have scored well in the management evaluation section, which is based on actual capital and financial indicators. Doosan Construction ranks 35th based on the Construction Capability Evaluation amount but 20th based on apartment construction performance.
An industry insider said, "Because the weighting for management status such as finance is high, even if construction performance is good, companies may not receive high scores," and pointed out, "The evaluation system should be improved to assign higher scores to construction companies’ construction performance and technical capabilities."
As criticism arises that the evaluation still places too much emphasis on external factors such as management evaluation amounts and does not properly reflect realities like construction performance, the Ministry of Land, Infrastructure and Transport recently commissioned a project to improve the evaluation criteria and plans to apply these changes starting next year.
Under the revised Construction Capability Evaluation criteria, the weight of the management evaluation amount will be reduced, and new items such as construction defects, safety, and efforts to eradicate illegal activities by construction unions will be added to the credibility evaluation. The new evaluation criteria are expected to be applied as early as next year, potentially causing some shifts in construction companies’ rankings.
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